German Government comes to the rescue of Condor, following the Thomas Cook Group fallout
The German Government today accepted the request made by Condor, the German subsidiary of Collapsed British tour and travel operator Thomas Cook Group Plc for a bridging loan of €380 million to keep its operations running. Its parent company Thomas Cook Group Plc of the United Kingdom filed for bankruptcy on 23 September 2019. There were thousands of passengers who were already booked with the airline on the day the bankruptcy was announced.
The Thomas Cook Group Plc collapse in the United Kingdom has sent shockwaves across the world. From Europe to Asia to Africa and the Americas, people are grappling to deal with the fallout. United Kingdom sends millions of tourists and holiday makers across the world every year, which directly and indirectly engages thousands of hotels and other businesses across the globe. There are many smaller countries and regions belonging in the Caribbean, southern Europe, Mediterranean, West Africa, South Asia, Australia, New Zealand and in the Americas, which are solely dependent on the leisure tourism and travel industry. With Thomas Cook being one of the largest and oldest leisure travel and tour operators in the world, many of these regions and businesses had large business dealings with the company. Now with the company going into liquidation, these businesses face the risk of nonpayment of dues already owed to them, mass cancellation of bookings and an uncertain future.
As of 23 September 2019, Thomas Cook Group Plc faces millions in dues to thousands of businesses across the world, so much so that many of these businesses face threat of liquidation as a consequence of non-receipt of the same. This has prompted many local authorities to call emergency meetings to deal with the situation.
Thomas Cook Group Plc also had many subsidiary businesses across the world who also face the threat of liquidation along with the parent company. Most prominent among them are the company’s two profitable airline entities -Thomas Cook Airlines based out of United Kingdom and Condor, a German airline both of whom flew Thomas Cook tour customers. With the Thomas Cook Airline going into liquidation, all the bookings made with the airline have been cancelled with immediate effect, which has led to hundreds of thousands of travelers being stranded across multiple tourist destinations across the world. Given the enormity of the situation the British Civil Aviation Authorities have launched a massive peacetime repatriation exercise to bring back these stranded citizens. This is now being described as the biggest ever peacetime exercise in the history of the country.
However, the German cousin of Thomas Cook Airline Condor continues to fly. Though a part of Thomas Cook Group Plc, the company is a separate legal entity with base of operations in Frankfurt, Germany. Soon after the collapse of its parent, Condor had made a request to the German Government for an olive branch rescue package to help it see through its operations during the lean winter season. The German government, after due consideration, has now been accepted the request. The rescue package will not only save the company thousands of cancelations in already booked tickets but would also help save thousands of jobs in the airline whereas thousands across the English Channel have already lost their jobs following the collapse of the British holiday making giant.
The airline company which is incorporated as Condor Flugdienst GmbH is a German airline based out of Frankfurt in Germany with smaller bases of operations scattered across Germany. The company has a total of 42 aircrafts and flies to leisure destinations across Europe, Mediterranean, West Africa, South Asia, Caribbean islands, Middle East, North America and South America. The airline, though more than 50 years old, became a part of Thomas Cook Group Plc during the mid-2000 when majority of its shares were acquired by the latter.
The German Government while extending the bridge loan facility to the Airline company stated that part of the reason to extend the loan to the airline was its profitable operations along with the jobs of thousands of German citizens employed with it. The loan will be partly borne by the Central government of Germany and partly by the local government of the state of Hesse where the airline is based. The German authorities while confirming the grant of the loan also said that they are in talks with the European Union commission in Brussels, whose ratification is necessary for this loan grant to go through.
Neil Woodford to sell IP Group Plc stake to pay off redeeming fund investors
Neil Woodford, the founder of Woodford Investment Management LLP, would be selling off its stake in IP Group Plc (IPO) in order to fund any redemption pressure by investors exiting its funds in the wake of the FCA investigation into its business practices.
Neil Woodford, once regarded as the star fund manager of United Kingdom, has a carrier spanning more than twenty-five years in the investment management industry. Before founding Woodford Investment Management LLP, he was employed with Invesco Perpetual where he ran multiple multi-billion-pound funds, which during his stint performed well and accorded him with the “Star Fund Manager” reputation in the process. He has been credited for his acumen and foresight to have been able to avoid the pitfalls of the 1994-2000 era dot-com bubble and the 2008-11 era financial crisis. He advocates investing for long-term value creation.
Neil left his job in 2014 in Invesco Perpetual as head of equities-United Kingdom and started his own venture Woodford Investment Management LLP and launched two funds during the next few years. However, both of his funds performed badly leading to a serious erosion of value. This led to a temporary trading suspension and investigation into the affairs of one of its funds by the Financial Conduct Authority (FCA) of the United Kingdom. Following this development, a lot of investors in the fund started to withdraw their money, putting the company’s future in serious peril. The company’s decision the sell off its stake in IP Group Plc in aimed at keeping as much cash with it as possible to pay off any discerning investor wanting to exit from the company.
While the decision the selloff stake in IP Group Plc has got more to do with the internal affairs of Woodford Investment Management LLP, share price of IP Group Plc has taken a plunge at the stock exchange in the wake of this news. The fundamentals of IP Group Plc remain the same as they were before the breaking of this news.
About IP Group Plc
IP Group Plc is a technology intellectual property business company based out of United Kingdom; the company works towards commercialization of the technology intellectual properties in its fold. The company founded in 2001 was first listed on the AIM segment of the London Stock Exchange. In 2016 it got upgraded to the main market of the London Stock Exchange where its shares trade with the ticker name IPO. The shares of the company are also components of the FTSE 250 index.
For the half-year ended June 2019, net portfolio gains were negative and the comprehensive loss for the period was £49.5 million.
The company has not been performing well in recent times and had declared a loss for the financial year ending 31 December 2018 without earning any revenues, while for the financial year ending 31 December 2017 the revenues were £103.5 million. The total comprehensive loss for the 12-month period ending 31 December 2018 was £293.9 million while for the 12-month period ending 31 December 2017 the total comprehensive income was £53.4 million. The Loss per share of the company on a diluted basis for the financial year ending 31 December 2018 was 27.71 pence while for the financial year ending 31 December 2017 the company had earned 7.04 pence per share.
The reason for this poor financial performance of the company was that it was not able to lease out any of its intellectual properties during the financial year, and yet it continued to fund research and development activities, which became the primary reason for its negative revenues. The bad business environment in the wake of Brexit prevailing in the United Kingdom can also be blamed in part for this performance, as businesses prefer to avoid making capital investments in technology and intellectual property during such periods. However, the company’s portfolio of intellectual properties is big and is expected to earn good revenues for the company when economic conditions improve.
On 25 September 2019, at the time of writing the report (before the market close, GMT 01.11 PM), IPO shares were trading on the London Stock Exchange at GBX 58.20. The stock has a 52-week High of GBX134.00, and a 52-week low of GBX 54.40. The total market capitalization of the company was £650.31 million.
With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities.
Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?
Well! Team Kalkine has a solution for you. You still can earn a relatively stable income by putting money in the dividend-paying stocks.
We think it is the perfect time when you should start accumulating selective dividend stocks to beat the low-interest rates, while we provide a tailored offering in view of valuable stock opportunities and any dividend cut backs to be considered amid scenarios including a prolonged market meltdown.